All good news are for the world community and the people of USA. But problem lies whether US administration can check the speculators of crude oil and the mineral exchanges who will start squeezing the benefits of such explorations and start plundering the wealth.

A few observations: Tax on U.S. petroleum is already 33%. The largest source of pollution (after coal-fired electrical generation) is Chinese coal mine fires. We are ten thousand years out of the last ice age, which lasted two million years. In ten thousand (more) years none of this will matter anyway.

I agree that the subsidies for oil should be either weakened or removed entirely. The true cost of fuel need to be realized. People need a wake up call. The high true cost will act as incentive to innovate with more R&D in alternative sources of energy (i.e Shale gas, Solar...etc). There will most definitely be radical shifts in consumption behaviors (especially with driving), but if that is what it takes to avoid an environmental catastrophe, so be it. We can only hope that new technology can quickly be discovered and made marketable in the coming future. Once again this can ONLY be achieved if the fuel subsidies were removed due to incentives.

Even though Hydrocarbons DO NOT contribute to global warming (there has been no temperature increase in the past 16 years and the whole Climate change dogma is completely concocted)...but the Environmental Neanderthals will still try to use this absurdity to stifle Industrial/economic progress.

Sorry I upset you but only a few hundred years ago we were much hotter and much colder unrelated to greenhouse gases. There is no physical model for a greenhouse effect so the entire concept is theoretical and largely concocted from falsified observations...if you don't want to be a Neanderthal you need to be a little more critical of your sources.

Sorry again, If you read the details of the sources you're going by, you'll find they're all unsupported by any experimental model and can't be demonstrated any where in the universe. Read it critically and maybe you'll see that it's not only not self evident but largely fantasy.

Any carbon trading scheme is merely "just another tax". The history of governments of all colours is that they gather tax in and then spend on vote catching schemes, thus preserving their power. When, for example, the EU and it's non-elected ruling bureaucracy can actually show that money gathered in through selling and trading carbon credits will be used wisely, the I might believe there is some merit in the scheme and not until then.
It was always said that the most frightening sound was the knock on the door at 3am in the communist countries of the old USSR, but this seems to have been replaced by the sound of a letter falling to the floor from any government stating that they will "help you to run things better."
Carbon trading schemes are a classic example of government "helping to run things better" and, as usual, doing so from a starting point of appalling ignorance as they are thought up by people with no direct knowledge of the energy industry and, particularly, the exploration industry.

P.S. Where did MY carbon credits go to? I might well like to trade them for a few quid.

Then I don't know. But I like the idea of a price on carbon emissions of which the proceeds are distributed on a per capita basis. It would nicely express the idea that we all have an equal right to the use of our atmosphere.

If you are using up less than your share, you'd make a net profit on that.

I wouldn't have a problem with that but, having lived most of my three score and ten I have never seen an example of government intervention actually handling things better than individuals (In general; There are, obviously, some individuals who cannot govern the basics of their own lives properly and need help.) but, usually, most people can make informed decisions and should be allowed to control their own lives rather than having someone else decide "what is good for them".

I still don't see how a tax which does not benefit anyone other than a few, already wealthy, individuals (Politicians with snouts in the trough), can a) save the world and b) be fair to the great bulk of the population who actually end up paying this tax.

You're making the unwarranted assumption that the a price on carbon emissions would benefit only a few, already wealthy, individuals. The revenue is collected by government. That's no different from any other tax.

The (democratically elected) government can then choose to spend the money on whatever is deemed most worthy. I would think it fair that revenues are handed back to the people on a per capita basis, but it could also be used to reduce the deficit or to increase military spending.

If we tax hydrocarbon and environmentally damaging energy, then the rational should be that we also spend the same and equivalent amount collected on renewable sources and on dealing with the environmental impacts of the hydrocarbons. This off-course we know will never happen.

The governments will tax hydro carbons and use the windfall to bankroll whatever else they see fit, and a token amount will be spent on the environment and an even smaller token amount will be spent on renewable energy sources and future technologies.

This is the rational under which American public does not support such tax schemes and why no politician can really get behind these schemes. In Europe, high fuel taxes have been around for almost 40 plus years now, and as such it has become accepted in the conscious of the taxpayer. Combined with good urban public transport networks public bak lash is small.

Imagine a city like Huston, Dallas or LA with little to no public transport (of significant size) and $2.50 cents a litter gas. You will have a mini revolt on your hands. Gas prices can only rise in America if schemes are designed to tax petrol, and use the windfall to directly impact the urban centers where the revenue was raised, in the form of environmental programs, public transport programs and other such schemes. If you abstract the benefit people will have a hard time to accept it.

Coupled with the kind of endless technological innovation that occurs in the US, this is likely to propel the North American continent much further ahead of Europe (and, practically, all other regions in terms of living standards), over which this is clearly a huge advantage. If the US is able to close its growing inequality gap, and limit the possible environmental damage this exploration is claimed to cause (water table contamination being chief amongst them), North Americans are set to become fabulously rich, relatively, and to grow a yawning gap in development and living standards between themselves and long-time Atlantic partners over in Europe - and by definition much of the rest of the planet. It's pretty shocking.

What then will be the effect on the US dollar as the world's reserve currency?

What will become of the US trade deficit - and indeed of US trade, it remains the largest trading sovereign?

What effect will this have on China, itself having advanced from sleeping giant to real player in what was recently a Western lead world?

Can't help thinking that Europeans will likely be the big loosers in the coming century, especially if relations between the EU and Russia remain frosty.

Damn well said! This is an opportunity that must not be blown in the haste to stuff ones bank account. Increasing fossil fuel use efficiency must continue to develop. Only when everyone can afford to take the time to understand civility can we live secure. The more we promote conspicuous consumption via "marximised" profit the more we divide the populations. To be able to entertain Schadenfreude is not a desirable attribute.

Indeed. I think that if we assume the price of hydrocarbons will increase as more of the world develops, this may open up opportunities for the US to explore in greater depth greener options such as wind, at better economy. Increasing prices will also certainly curb demand. It will be a race between our extraction and combustion of hydrocarbons, and deterioration of the environment, collapse of ecosystems. Which will depleted first? Appreciate the Latin, thanks.

"It will be a race between our extraction and combustion of hydrocarbons, and deterioration of the environment, collapse of ecosystems. Which will depleted first?"

Ah, but that's the catch - the extraction will win hands down! If we choose to go down that path, in the early stages, the extraction and combustion will fuel the economy, even as the same bonanza sows the seeds of the destruction of those ecosystems we depend upon for food, clean water and air. The climate system has much longer lags than the economic system in its reaction to cheap energy.

Sadly, climate science indicates that if we burn all the hydrocarbons we can get our hands on.the ecosystems will collapse, even if we then switch to non-carbon energy sources. It will simply be too late to prevent that, partly due to positive feedback loops in the climate system. Fossil fuels need to be expensive to force us to develop alternatives. (And if the US has cheap energy while the rest of the world does not, that technology will be developed - and patented - elsewhere.)

The challenge, thus, is to make people see that if we succumb to the temptation of cheap fuels now, we will pay a heavy price later. (And more so our children and our children's children, etc.)

Got another one for you: Ut sementem feceris ita metes. (Credits to Google, I should add.)

By your baseless and corrupt, misunderstanding calculus you would have us all compete for dominance. Would that be nuclear dominance or monetary or military dominance? Clearly there's money to be made selling your nuclear science. Some progress that would be!

What value is that which you teach your children? "Hurry up and learn to manipulate wars to your own benefit son; there's money to be made at it." Is that it?

Whether the President approves the Keystone pipeline or not misses the more complicated problem of approving the pipeline at the local level. All the President can do is approve the pipeline to cross the US border. The numerous permits that must be obtained at a local level represents a far more colossal task.

"The numerous permits that must be obtained at a local level represents a far more colossal task."

What do you base that on? Most of the pipeline is already being built to bring crude oil form North Dakota to the refineries on the gulf coast. Really approval of the Keystone XL would only involve a few dozen miles near the border...

Priced correctly to someone from the UK or Europe means jacked up artificially to account for CO2 emissions that have nothing to do with temperature or global warming. No thanks. CO2 has no correlation with warming as has been proved multiple times without magazines like The Economist caring at all. Just repeating the same false mantra won't make it a reality. While Europe has seen emissions of CO2 rise, America's has fallen because of capitalism. What Europe calls capitalism I call state sponsored socialism that is failing in every way, especially with respect to CO2 emissions and energy cost. Now you want America to import your failed policies. No thanks. When it becomes clear that Global Warming is a joke, The Economist will try to pretend like it never happened. Good luck, you are on record.

The numbers say that we *are* importing European policies, to wit: the Obama administration's constant push for ever more stringent regulation of business from trying to kill coal as a fuel with nano-quantities of mercury in coal-fired emissions to how companies raise money.

This gratuitous kicking of America's producers in the nuts at every opportunity has borne fruit: Our emissions are already at kyoto-approved 2020 levels, because of painfully reduced economic activity. And that is very European, IMHO.

"... CO2 emissions that have nothing to do with temperature or global warming. No thanks. CO2 has no correlation with warming as has been proved multiple times without magazines like The Economist caring at all."

This is simply not true. I recommend *you* take your own advice: "Just repeating the same false mantra won't make it a reality."

Rather simpleetonian response, thank you very much. The levels of mercury in coal effluent are at an ultra-safe level already. No human harm, to the nth degree. I'd say the regulation has done its job already. The decree from our EPA calls for further elimination of extremely miniscule amounts of mercury to an even more miniscule level. The point isn't that mercury is safe and/or I and others of my ilk just don't care. The point is to set it at a level where coal-plant retrofitting to remove the miniscule amount of mercury is cost-prohibitive, and results in closing coal mines and coal-powered power plants. As Obama said early in his first term, he is out to shut down coal-fired power generation, a rough quote: "you can build a new coal power plant, but we'll make sure you don't make any money doing it."

Now to you that may all mean the same thing. Coal bad, switch-grass good. By the way, I have yet to see any science on how much fly ash is generated in burning switch-grass. It is not a concentrated energy fuel such as coal or petroleum, or even wood. It's grass. No one burns wood; if you have a fireplace and use it, you'll know why. "renewable" fuel is big on fly ash, which is why you'll never hear about it being actually used, IMHO.

One of the reasons the economy isn't thriving, a big reason, is now over-regulation, of which the above discussion illustrates one of the worst examples, and the accompanying attitude of the Obama administration.

According to what authority is American life expectancy lower than poor Cuba? That's a howler, IMHO.

Rather simpletonian response, thank you very much. The levels of mercury in coal effluent are at an ultra-safe level already. No human harm, to the nth degree. I'd say the regulation has done its job already. The decree from our EPA calls for further elimination of extremely miniscule amounts of mercury to an even more miniscule level. The point isn't that mercury is safe and/or I and others of my ilk just don't care. The point is to set it at a level where coal-plant retrofitting to remove the miniscule amount of mercury is cost-prohibitive, and results in closing coal mines and coal-powered power plants. As Obama said early in his first term, he is out to shut down coal-fired power generation, a rough quote: "you can build a new coal power plant, but we'll make sure you don't make any money doing it."
Now to you that may all mean the same thing. Coal bad, switch-grass good. By the way, I have yet to see any science on how much fly ash is generated in burning switch-grass. It is not a concentrated energy fuel such as coal or petroleum, or even wood. It's grass. No one burns wood; if you have a fireplace and use it, you'll know why. "renewable" fuel is big on fly ash, which is why you'll never hear about it being actually used, IMHO.
One of the reasons the economy isn't thriving, a big reason, is now over-regulation, of which the above discussion illustrates one of the worst examples, and the accompanying attitude of the Obama administration.
According to what authority is American life expectancy lower than poor Cuba? That's a howler, IMHO.

Energy consumption and climate change have close relationship. But climate change on account of global warming has become a very contentious issue. So far USA and Canada have not taken any serious measures to reduce their energy consumption, though fuel efficient cars are making a good impact. If USA becomes self sufficient in energy, it is unlikely to place any curbs on energy consumption.
During the just concluded US presidential elections global warning and its effects was a non-issue. Other developed countries in the West, except a few, and China, Japan. South Korea. Australia are some other countries who also need to take serious note of the global warming effects but it appears that they too are not very much eager to take any specific steps to counter global warming. This is the reality.

Perhaps, major natural disasters may compel some of these countries to take such steps. India and other developing countries who have not been very careful in the matter of environmental protection have to their bit but without active participation of the developed world nothing much will be achieved.

Exploring and producing oil and gas in areas that are susceptible to production failure and environmental pollution, is what happens when government and industry decide that exploration and profits are paramount over the environment. Personally we would rather have less of what cheap energy brings, than no clean water.
Clean water is the lifeblood of all living things and thus its protection is paramount.

Today I just read some pages of Mankiw's microeconomics. It talked about the oil.
To be honest, we have to depend on oil and gas to make the globe revolve. However, just because it is limited resource, there must be problems. Not enough supply will make the price higher. Suppliers turn to make profits by supply less. So maybe countries that do not have oil bonanza will be afraid that the price of the resources would be so high. Well, we do not know what America is going to do.

This is a sellers' market. They have the say. So we can only wait and see.
I am thinking about if we can develop other energies to gradually substitute oil. However, I am not a scientist, and I have no idea.
Sorry.
But I do love the earth, and I want people to cooperate more to benefit not only themselves but also others, people and animals and plants.

I would rate your comment as one of the most ridiculous I have read. The planet earth is the definition of an animate object (Not having the qualities associated with active, living organisms.)
Not only is it the source of all earthly life but it is life itself.

With such a natural gas glut, it would be wise not to waste the natural gas on electricity production (nuclear is magnitudes more energy dense and thus efficient), but to use it to displace oil used for transportation, in the form of natural gas powered vehicles. You'll have a much reduced trade deficit as well as much less carbon emissions (nuclear energy has no CO2 emissions and natural gas has lower CO2 emissions than gasoline).

The US has seperated alot of indirect costs of energy from the consumer by raising taxes elsewhere, ie.- income taxes, sales taxes, property taxes, etc. YOU ARE CORRECT. IF THE CONSUMER DOESN'T SEE THE INDIRECT COSTS OF THE ENVIRONMENT, MILITARY, ETC. AT THE GAS PUMP OR THE UTILITY BILL THEN ENERGY IS SOLD TO CHEAP AND IS WAISTED. THE US SHOULD RAISE THE TAX ON ENERGY AND LOWER INCOME TAX! BUT THAT WON'T GET ANYONE ELECTED - SO FORGET ABOUT IT.

I am confused by the 4th paragraph, particularly this sentence: "By contrast, in Europe, which does have a carbon-trading system but never developed shale gas, emissions have risen over the past three years. Europeans are shuttering nuclear-power plants and backsliding to filthy coal. "

You site the TAX that is the Carbon-Trading system as being ineffective (in efforts to reduce emissions) yet you recommend that Americans pay a bigger TAX in effort to reduce emissions.

The quoted sentence was only mean to highlight the fact that there are many variables involved. How much higher European emissions be without the tax is difficult to say, but everyone agrees they would be higher.

My question is what will be the impact of this bonanza on the broader markets (especially returns for US indices) over the next couple of decades. Positive, no doubt, but by how much? Will we return to the go-go years of the 80s and 90s? Also, for a more tailored investment strategy to reap the benefits of this bonanza, what companies would be good to invest in? Oil giants like Exxon-Mobil or the actual manufacturers of the fracking equipment? If the latter, anybody got their names/tickers?